Analysts Defend Intuitive Surgical After FDA Report

By Teresa Rivas

Shares of Intuitive Surgical (ISRG) were rising in recent trading, after taking a hit in after hours trading on Tuesday, following a note from the Food and Drug Administration.

The report, known as a Form 483, detailed inspections at one of the company’s facilities from April 1 and May 30, and laid out four observations about the company’s documentation and reporting practices.

Intuitive is reporting each of the four issues addressed in the observations has been corrected, which must be verified by the FDA.

Canaccord Genuity’s Jason Mills reiterated a Buy rating and $527 price target on the stock today, writing “Based on our conversations with management last night, we believe the objections listed on the Form 483 are primarily administrative in nature, do not reflect any safety concerns with the da Vinci surgical system, and will not likely pose any material impact to the business. What’s more, based on our discussions with management last night, we believe management has thoroughly addressed each observation. We would be buyers of the stock on any weakness relating to this Form 483.”

Wedbush Securities’ Tao Levy also reiterated an Outperform rating and $580 price target on the stock, writing “The next steps will be for the FDA to verify the reported corrections of the 483s. If the agency is satisfied, then no other actions will occur. If they are not, then a Warning Letter may be issued and ISRG will have to make additional corrections. Either way, the 483s will not have any impact on the company’s ability to continue manufacturing, marketing, and selling da Vinci systems and instruments. We would be buyers of ISRG on this pullback.”

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There are 2 comments

JUNE 26, 2013 11:52 A.M.

Ben wrote:

Science and Government on one side, investors and marketing departments on another. Lets see how this plays out. I say the realization that this machine has no effect one year after surgery detectable by double blind studies will eventually be the main reason it is moth balled in a decreasing reimbursement environment.

JUNE 26, 2013 5:23 P.M.

John wrote:

Ben- I think anyone who has ever been in the OR would tell you that there is a huge difference in the outcomes of these procedures compared to open surgery. When cost effectiveness is evaluated, infection rates, transfusions, length of stay and many other factors make the added cost of using the robot look like peanuts. If the robot enables more minimally invasive procedures it is here to stay. If anyone thinks that innovation in surgery is over, you may not want to support intuitive. If you agree with me that this technology is getting better every year and will continue to improve over the next decade, buy some shares now.

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